Fostering Resilience in Emerging Oil Producers

Summary

  • COVID-19 and the spring shock to oil markets had significant impacts on the emerging oil and gas producer countries that make up the New Producers Group. The crisis affected individuals, organizations and national plans for hydrocarbon sectors. The group held a series of discussions from March 2020 that aimed to assist governments in the development of crisis responses and strategies
    that could be adapted to an energy sector in transition.
  • In response to a crisis, the main priority is to understand its causes and review its impact. When much of public life shut down due to the pandemic in March 2020, it struck a blow to oil demand at a time when the market was already oversupplied. Oil prices fell sharply, which, together with the health crisis, prompted oil companies to reassess projects, upending operations in many countries.
  • While oil prices recovered partially in the months that followed, the sector remains in crisis – particularly in the more expensive emerging oil and gas producer countries. Prior to COVID-19, oil companies were already more risk averse in response to investor pressure.
  • The focus of the New Producers Group has turned to understanding what the new normal might look like post-crisis and in particular what impact the pandemic might have on the pace of the energy transition. The development of scenarios helped meeting attendees manage multiple uncertainties, such as the path of the pandemic, its economic impacts, policy responses and public support for the concept of building back better.
  • ‘Boom time’ is over for the oil sector. For emerging producers, the poor outlook means that there will be fewer projects and those that do go ahead will be low risk. But even in areas where continued oil company interest is likely, government planners should understand the risks associated with fiscal dependence on the petroleum sector and also with building up industry-specific local content.
  • National investment in the petroleum sector should be considered in relation to the potential returns it can generate and the negative impacts it could have on other national objectives, such as climate goals, environmental wellbeing, and fiscal stability.

The paper is available to download below.

You are invited to the launch of the report 3 March 2021 at 2pm GMT.

Covid-19 Impact on the Oil and Gas Sector

The global health crisis caused by the COVID-19 pandemic has required extraordinary measures across the world and led to unprecedented disruption in global oil markets. This policy brief gives an overview of the oil market price crash, the subsequent response by companies and how COVID-19 has impacted the outlook for oil and gas markets. It also provides a summary of the oil and gas sector in Commonwealth countries to highlight the member states that will be most affected by the current crisis. It ends with an overview of key issues for the oil and gas sector going forward and discusses the implications for Commonwealth countries.

The paper is available at the link below.

Africa’s New Oil and Gas Producers Must Prepare for More Disappointment in the Post-Coronavirus Era

 

The crash in oil and gas prices, triggered by the coronavirus pandemic and the slump in economic activity, has dealt a blow to the plans and public finances of major oil and gas producing countries. But a group of countries in sub-Saharan Africa once designated as “prospective producers” are facing a different challenge. For new producers in the pandemic era, some licensing rounds are likely to be cancelled, and production is being pushed back once more. Debt is becoming an even greater issue. Yet some investors – like Total in Uganda – still show signs of interest. To clarify this mixed picture, we have reviewed our analysis of the experience of the 12 sub-Saharan African countries that made their first major discoveries during the period from 2001 to 2014.

A link to the original article is available below.

Post-pandemic outlook for the oil and gas industry

Atul Arya from IHS Markit returned to the Fostering Resilience in Crisis series to give us an updated outlook for the energy sector post-Covid. This meeting was under Chatham House Rule. Watch the highlights in the below video. The full recording is available on the members’ platform.

Highlights of the meeting

 

Finance and the energy transition

For this panel discussion on the role of finance in the energy transition, the New Producers Group brought together a range of different actors in the investment community, from banking and international finance institutions to private equity capital and fund managers. We asked them how they perceive the relative risk of oil, gas and renewables in emerging markets in light of Covid and the oil price slump. This meeting of the Fostering Resilience in Crisis series was on the record.

Highlights of the meeting

 

Full webinar recording 

 

Impact of Covid and the oil price crash on the local content policies

The risks associated with global supply chains are more prominent as a result of the crisis. But there are also risks associated with local suppliers. Will international oil companies’ own commercial and strategic interests drive them to invest more in developing the capabilities of local suppliers? How can governments reduce the vulnerability of their national suppliers to pandemic risks? This meeting in the Fostering Resilience in Crisis series was under Chatham House Rule. The full recording is available on the members’ platform.

Highlights of the meeting

The impact of Covid-19 and the oil market crash on the pace and course of the energy transitions

This meeting in the New Producers Group series Fostering Resilience in Crisis examined the impact of the oil price crash and the Covid pandemic on the pace and course of the energy transition, with a specific focus on the impact on oil and gas vs. energy alternatives. Two scenarios helped structure the discussion. The full recording is available on the members’ platform.

Highlights of the meetings

Government and company response to the crisis

During this time of global pandemic and oil market crash, maintaining and fostering resilience is a focus in all of the member countries of the New Producers Group. This virtual meeting examined how oil companies and governments are thinking about the crisis and how they can respond to foster resilience of their people and organisations. This meeting was under Chatham House Rule. The full recording is available on the members’ platform.

Highlights of the meeting